Indonesia: Trade surplus at 9-year highs – UOB

Economist at UOB Group Enrico Tanuwidjaja and Haris Handy reviewed the recent trade balance results in Indonesia.

Key Quotes

“Indonesia posted the biggest trade surplus in nearly a decade of USD3.6bn in October 2020 (since August 2011 at roughly the same figure), widening from September's USD2.4bn with imports falling faster than exports. This marked a sixth straight month of trade surplus since May 2020. Exports in October fell by -3.3% y/y vis-à-vis September’s -0.9% %, attributable to higher contraction in oil and gas as well as mining sector exports. Nevertheless, exports still grew by +3.1% on month-on-month basis, given a surge in crude palm oil (HS-15) and coal (HS-27) exports to China (both in terms of price and volume). Meanwhile, imports dropped by -26.9% y/y in October vs. -18.9% in the previous month, underpinned by lower imports in all goods category, mainly for capital goods i.e. electrical machinery and equipment (HS-85) from China as well.”

“From January to October of this year, Indonesia booked a USD17.7bn trade surplus which was a significant improvement from the USD0.7bn deficit recorded over the same period last year. Going forward, exports may continue to rise moderately on the back of a global economic recovery. In consequence, this may continue to improve Indonesia’s trade balance this year, thus improving the current account which will be positive factor to support the IDR.”